Wealthier seniors pay more for Medicare under Obama plan

WASHINGTON - President Barack Obama's new plan to raise Medicare premiums for upper-income seniors would create five new income brackets to squeeze more revenue from the top tiers of retirees.

WASHINGTON — President Barack Obama’s new plan to raise Medicare premiums for upper-income seniors would create five new income brackets to squeeze more revenue from the top tiers of retirees.

The administration revealed details of the plan yesterday after Health and Human Services Secretary Kathleen Sebelius testified before Congress on the president’s budget. The details had not been provided when the budget was released earlier in the week.

The idea of “means testing” has been part of Medicare since the George W. Bush administration, but ramping it up is bound to stir controversy. Republicans are intrigued, but most Democrats don’t like the idea.

The plan itself is complicated. The bottom line is not: more money for the government.

Obama’s new budget calls for raising $50 billion over 10 years by increasing monthly “ income-related” premiums for outpatient and prescription-drug coverage. The comparable number last year was $28 billion over the decade.

Currently, single beneficiaries making more than $85,000 a year and couples earning more than $170,000 pay higher premiums. Obama’s plan would raise the premiums themselves and also freeze adjustments for inflation until 1 in 4 Medicare recipients is paying the higher charges. Right now, the higher monthly charges hit only about 1 in 20 Medicare recipients.

Starting in 2017, there would be nine income brackets on which the higher premiums would be charged. There are only four now.

If the proposal were in effect today, a retiree making $85,000 would pay about $168 a month for outpatient coverage, compared to $146.90 currently.

Under current law, the next bump doesn’t come until an individual makes more than $107,000. Under Obama’s plan, it would come when that person crosses the line at $92,333. If the plan were in effect today, the beneficiary would pay about $195 a month for outpatient coverage under Medicare’s Part B, rather than $146.90.

The top income step — currently more than $214,000 — would be lowered to $196,000. And individuals in the new top tier would pay 90 percent of the cost of their outpatient coverage, compared to 80 percent currently.